Why renting is not a waste of money


Renting your home has a lot of things going for it compared to buying. If what you’re looking for in your personal and professional life is flexibility, mobility and a ‘financial cushion’ renting is a better bet. We explain in more detail below.

Historically, the Spanish ‘property mindset’ has been characterised by the generalised conviction that “renting is a waste of money”. However, the economic crisis of 2008 led to a change in the collective opinion. Many people were glad not to have had a mortgage at that time.

However, the increase in prices for both renting and buying property in the last two years seems to have rekindled the rent vs buy debate.

At Testa Residencial we believe that when choosing between these two options, in addition to making calculations and assessing the financial risks, you need to take into account your personal and professional goals. It’s not the same to have had a stable job for decades in the same city where your family is already settled as to be a professional without ties who is prepared to move to where the opportunities are. In the latter case, the better option may be renting.

But aside from geographical mobility, there are other factors that might make renting more suited to your needs.

If when comparing the rent with the mortgage for properties with comparable characteristics, the rent turns out to be higher than the mortgage instalment, you need to take into account that renting saves on taxes, insurance and the community charge.

If the rent is lower than the mortgage instalment, the difference is money that can be invested to obtain a return.

In addition, compared to buying a property, renting does not involve paying interest on a mortgage. Interest that, moreover, can vary if the mortgage payment is calculated on the basis of an index, such as Euribor, and according to the amount lent.

The opportunity cost also needs to be taken into account. Deciding to buy means the money you spend on the deposit cannot be used to cover other expenses or invested in order to obtain a return.

And what happens if your needs change? Renting gives you greater flexibility if you have to change home because the family has grown or because your income has decreased.

So, if you’re certain that renting is your thing, make sure to look at the properties we have to offer. At Testa Residencial we put at your disposal a wide range of properties in the main regions and cities of Spain.

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